A fall in buyer demand appears to be prompting existing homeowners to slash their prices in order to get a sale, reports the RICS.
What’s the latest?
Property sales fell in October as buyers shunned the housing market in the face of uncertainty and rising interest rates.
Estate agents reported a drop in transactions across most regions of the country, with buyer demand continuing to decline, according to the Royal Institution of Chartered Surveyors (RICS).
Prices remained flat across the UK as a whole, but in London 63% more agents reported falls than those who saw rises, the highest level since the housing market correction in 2009.
The top end of the market has been hit particularly hard by the slowdown, with 70% estate agents saying homes valued at more than £1m were selling for less than their asking price, while 62% said the same thing about properties priced at between £500,000 and £1m.Above: In Harrow, this refurbished, two-bedroom ground floor flat has had its price reduced by 5.1% to £369,950
Why is this happening?
Simon Rubinsohn, RICS chief economist, said: “The combination of the increased cost of moving, a lack of fresh stock coming to the market, uncertainly over the political climate and now an interest rate hike appears to be taking its toll on activity in the housing market.”
Recent house price growth has also made affordability increasingly stretched, at a time when incomes are struggling to keep pace with inflation.
Rubinsohn added that existing homeowners were staying put, while first-time buyers were increasingly focused on the part of the market supported by the Government’s Help to Buy scheme.Above: Now listed for £425,000 after £10,000 was slashed off the asking price, is this four-bedroom detached house in Peasedown St John, near Bath
Who does it affect?
The lack of property for sale is prompting those who would like to trade up the ladder to hold tight.
This in turn reduces choice for those who want to make a purchase, causing them to delay their decision.
Decreasing buyer demand appears to now be leading to existing homeowners having to slash their prices in order to get a sale.
RICS said it was not just potential buyers and sellers who were suffering, pointing out that a stagnant property market was also negative for the wider economy as it restricted mobility.
Sounds interesting. What’s the background?
While there continue to be regional variations, most areas of the country are now suffering from the slowdown.
Wales, Scotland and the north east were the only places to see an increase in transactions, with all other regions reporting falling or flat sales.
At the same time, only estate agents in the north west, Wales, Scotland and Northern Ireland saw house price gains.
Going forward, the majority of agents think property values will fall at a national level over the coming three months.
But they were more optimistic about how the market would perform a year from now, with those in 10 out of 12 regions expecting prices to be higher.
The exceptions were London, where estate agents think prices will fall over the coming 12 months, and the south east, where they expect them to remain flat.Above: Now on the market for £1.5m, this five-bedroom detached house in Welwyn Garden City, Hertfordshire, was initially listed for £1.6m
Top 3 takeaways
- Property sales fell in October as buyers shunned the housing market in the face of uncertainty and rising interest rates
- Estate agents reported a drop in transactions across most regions of the country, with buyer demand continuing to decline
- Prices remained flat across the UK as a whole, but in London 63% more agents reported falls than those who saw rises
You might also be interested in...
- House prices rise by 0.2% as property market remains subdued
- Housing market confidence falls to five-year low
- Base rate rise: what it means for your mortgage